As a daughter, sister, wife, mother and aunt, I, like many of you, fill many roles as a woman. While there have been significant improvements to the gender gap in the workplace, statistics show that women are still at risk of not achieving their own financial security.
While women are just as capable as men, there are many factors that contribute to this added risk.
Women are more likely to take time off to raise children or care for aging parents, which reduces their time in the work place. Less time in the work place leads to fewer women contributing to a retirement plan at work, earning lower wages, and therefore reducing Social Security benefits in the future. Significant portions of women return to work part-time which also limits their financial progress. Because women have a longer life expectancy, this deficit is emphasized even more. Women need to have a larger nest egg to reduce the risk of not running out of money.
According to the 18th Annual Transamerica Retirement Survey for American Workers, women responded as follows:
- 53% of women plan to retire after age 65 or don’t plan to retire
- 64% do not have a backup plan for retirement income if forced to retire sooner than expected
- 51% of women cite saving for retirement as a priority
- 81% of women are concerned that Social Security won’t be there for them when they are ready to retire
- 12% of women are “very confident” in their ability to fully retire with a comfortable lifestyle
The survey continues on to share that 55% of women “guessed” how much income they would need in retirement, and only 1 in 3 use a professional financial advisor to help them manage their retirement savings.
How would you respond? Where you are today in your retirement plans?
While none of us can go back and change the past, we do have control over our future decisions. Like many things in life, the hard part is just getting started. Here are a few tips and suggestions to get you on the right path towards your own financial security.
Educate yourself. Women have a tendency to make decisions only when they have all the information. Don’t be embarrassed about what you don’t know. Ask questions. Take a class. Read financial articles and literature. Women are more likely to talk to friends about health issues, shopping tips, and parenting issues than they are about investment ideas and habits. The more you learn the better. You can learn a lot about what to do right and what to avoid by asking others to share their experiences. Seek financial advice if you’d like to leave it to the professionals. As women, knowing and understanding how to maximize income from your retirement accounts and adopting the best social security strategy to stretch out income as long as possible is crucial …especially since we live longer than men.
Write it down. We are much more likely to achieve a goal when we write it down. Create a plan to help you reach your goals, and then be accountable for it. Often it’s easier to be accountable to someone else, like a financial advisor, or a trusted friend.
Don’t pass up free money. While this may sound obvious, many women don’t contribute to their employer retirement plan or don’t contribute to an IRA. “I won’t be working here long”, or “My husband is saving at his work”, or “I only work part-time”, are common reasons why many women don’t contribute to their own retirement accounts. To attract and retain employees, employers will often match your own contributions up to a certain percentage. Many employers match 100% of your contributions up to a maximum of 3% of your salary. So, you should contribute at least 3% of your salary, otherwise you are giving away free money.
Avoid the “he takes care of that” pitfall. If you’re married, have a discussion with your spouse about your joint retirement goals and how you’re going to get there. Be aware and involved in your family finances. Statistics show that half of all women over the age of 75 live alone. The probability that you’ll be in charge of your own finances at some point in your life is high. Be proactive in understanding your current situation and your plan to help you achieve your future goals.
Stay marketable. Even though many of us have taken time off to raise children or work part time, it’s important to stay marketable. What type of work did you do previously? How can you maintain those skills? How are your computer skills? Keeping pace with the ever-changing work environment will be beneficial if you need to return to the work force. Stay in touch with past employers and co-workers. Often there are opportunities to return to work, consult, or start your own business if you’ve got a network of previous contacts to fall back on.
Many women feel comfortable with day-to-day financial tasks such as household budgeting and balancing a checkbook. However, as you begin taking steps like the ones mentioned above, confidence in your ability to secure your own future financial stability will grow too.
Tell yourself…today is the day! You’ve got this!
Securities offered through The Strategic Financial Alliance, Inc. (SFA), Member FINRA/SIPC. Advisory Services offered through Strategic Blueprint LLC. and The Strategic Financial Alliance, Inc. SFA and Strategic Blueprint are affiliated through common ownership but otherwise unaffiliated with Keen & Pocock.
This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice as individual situations will vary. The SFA or Keen & Pocock do not provide tax or legal advice.